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Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank.    Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 1. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable  Journalize the entries to record the following:  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Notes Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable   The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30. 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable  Determine the total interest expense for 20Y1. Fill in the blank 4.

Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank.    Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 1. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable  Journalize the entries to record the following:  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Notes Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable   The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30. 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable  Determine the total interest expense for 20Y1. Fill in the blank 4.

Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
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ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
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Bond Discount, Entries for Bonds Payable Transactions

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

 

  1.  Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

20Y1 July 1

1.

  • Accounts Payable
  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

2.

  • Accounts Payable
  • Bonds Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable
  •  Journalize the entries to record the following:
  •  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y1 Dec. 31

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Notes Payable

2.

  • Bonds Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Interest Revenue
  • Notes Payable

3.

  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable
  • Premium on Bonds Payable
  1.   The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y2 June 30.

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

2.

  • Accounts Payable
  • Bonds Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

3.

  • Accounts Payable
  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable
  •  Determine the total interest expense for 20Y1.
    Fill in the blank

4.

  •  Will the bond proceeds always be less than the face amount of the bonds when the contract rateis less than the market rate of interest?

1.

  • Yes
  • No

 

  1.  Compute the price of $42,309,236 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount

Fill in the blank

Present value of the semiannual interest payments

Fill in the blank

Price received for the bonds

Fill in the blank
Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3. Determine the total interest expense for 20Y1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $42,309,236 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds
Transcribed Image Text:Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 3. Determine the total interest expense for 20Y1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of $42,309,236 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Present value of the semiannual interest payments Price received for the bonds
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